- First Islamic Finance Consumer Report finds that 46% of Muslim consumers have never used Shariah-compliant products
- But 61% believe Islamic finance works hard to better serve its customers and 85% of existing Islamic finance customers say their experience exceeded expectations
- Report highlights that the industry needs to work harder to raise awareness – with two-thirds of Muslim consumers finding it hard to purchase Islamic finance products
Nearly half of Muslim consumers have never used Shariah-compliant products, marking a wake-up call to the UK Islamic banking industry, new research by Home Purchase Plan provider and Shariah-compliant bank Gatehouse reveals.
A surprising 46% of Muslim consumers say they have never used Shariah-compliant products, according to the study.
The figure1 — which rises to 53% among Muslim women — underlines the challenge faced by Shariah-compliant finance providers.
However, a number of positive findings highlight the huge opportunity available to the sector if it invests in the right areas.
Seven in ten (71%) Muslim consumers questioned believe that Islamic finance is dedicated to the interests of the community, while 61% believe it works hard to better serve its customers. A staggering 85% of existing Islamic finance consumers said that their experience exceeded their expectations, suggesting that using this rich seam of positive experiences and building on a sense of community could be key to increasing popularity.
Gatehouse Bank’s 2019 Islamic Finance Consumer Report, is believed to be the first study of its kind to unpick the barriers and drivers to adoption of Shariah-compliant products by Muslim consumers in Britain. Muslim consumers contribute £31billion to the UK economy, boasting a spending power of £20.5billion2.
A key recommendation of the report is that the industry better communicates what makes its products Shariah-compliant, after finding that over three-fifths (61%) of consumers were sceptical about how Islamic the products really are.
Awareness and perception of Islamic finance among non-users of Islamic products is one of the industry’s biggest obstacles to overcome, with only 53% of non-users knowing anything about it, and only 35% of non-users viewing it favourably, the research found.
Among consumers who said they were not interested in Islamic finance, awareness fell to just over a third (36%) and positive perception to a disappointing 3%.
The study also found that, while 71% of people surveyed thought that Islamic finance was trustworthy and ethical, some 60% found it difficult to purchase, and 62% thought it was hard to compare options.
Islamic finance providers need to work with the community to increase awareness and improve perceptions of their products to boost adoption by the 60% of Muslim consumers who don’t currently use Islamic finance, the report recommends.
This is because friends, family and colleagues are the most common sources of information among those who have never used Islamic finance, with over a third (34%) of those yet to use Shariah-compliant products hearing about it through these channels. Almost three in ten (28%) read about it on the internet, almost two-fifths (18%) learned about it from social media, while 14% heard about it on Muslim-specific media including TV, radio and podcasts, the report found.
Beyond their community, interested consumers also value the opinions of faith leaders – with 33% relying on Islamic scholars, and 32% seeking the advice of Muslim financial experts.
People aged over 45 years value the opinions of Muslim financial leaders more than any other age group, while consumers aged between 25 and 44 value the opinion of the media more than any other age group.
Charles Haresnape, CEO of Gatehouse Bank, said:
“Our report highlights that providers of Shariah-compliant finance are missing out because of a largely untapped market for their products.
“If nearly half of all Muslim consumers have never used Islamic finance that means hundreds of thousands of potential customers are waiting to be reached.
“A key lesson is that we and the whole industry need to do a better job of reaching out to the Muslim community and explaining the benefits of Shariah-compliant products.
“Most importantly, the research shows we need happy customers and faith leaders to become community advocates for Islamic finance because word-of-mouth is highly valued among Muslim consumers.”
Bank of England’s Haldane says inflation “tiger” is prowling
By Andy Bruce and David Milliken
LONDON (Reuters) – Bank of England Chief Economist Andy Haldane warned on Friday that an inflationary “tiger” had woken up and could prove difficult to tame as the economy recovers from the COVID-19 pandemic, potentially requiring the BoE to take action.
In a clear break from other members of the Monetary Policy Committee (MPC) who are more relaxed about the outlook for consumer prices, Haldane called inflation a “tiger (that) has been stirred by the extraordinary events and policy actions of the past 12 months”.
“People are right to caution about the risks of central banks acting too conservatively by tightening policy prematurely,” Haldane said in a speech published online. “But, for me, the greater risk at present is of central bank complacency allowing the inflationary (big) cat out of the bag.”
Haldane’s comments prompted British government bond prices to fall to their lowest level in almost a year and sterling to rise as he warned that investors may not be adequately positioned for the risk of higher inflation or BoE rates.
“There is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets,” Haldane said.
He pointed to the BoE’s latest estimate of slack in Britain’s economy, which was much smaller and likely to be less persistent than after the 2008 financial crisis, leaving less room for the economy to grow before generating price pressures.
Haldane also cited a glut of savings built by businesses and households during the pandemic that could be unleashed in the form of higher spending, as well as the government’s extensive fiscal response to the pandemic and other factors.
Disinflationary forces could return if risks from COVID-19 or other sources proved more persistent than expected, he said.
But in Haldane’s judgement, inflation risked overshooting the BoE’s 2% target for a sustained period – in contrast to its official forecasts published early this month that showed only a very small overshoot in 2022 and early 2023.
Haldane’s comments put him at the most hawkish end among the nine members of the MPC.
Deputy Governor Dave Ramsden on Friday said risks to UK inflation were broadly balanced.
“I see inflation expectations – whatever measure you look at – well anchored,” Ramsden said following a speech given online, echoing comments from fellow deputy governor Ben Broadbent on Wednesday.
(Editing by Larry King and John Stonestreet)
Bitcoin slumps 6%, heads for worst week since March
By Ritvik Carvalho
LONDON (Reuters) – Bitcoin fell over 6% on Friday to its lowest in two weeks as a rout in global bond markets sent yields flying and sparked a sell-off in riskier assets.
The world’s biggest cryptocurrency slumped as low as $44,451 before recovering most of its losses. It was last trading down 1.2% at $46,525, on course for a drop of almost 20% this week, which would be its heaviest weekly loss since March last year.
The sell-off echoed that in equity markets, where European stocks tumbled as much as 1.5%, with concerns over lofty valuations also hammering demand. Asian stocks fell by the most in nine months.
“When flight to safety mode is on, it is the riskier investments that get pulled first,” Denis Vinokourov of London-based cryptocurrency exchange BeQuant wrote in a note.
Bitcoin has risen about 60% from the start of the year, hitting an all-time high of $58,354 this month as mainstream companies such as Tesla Inc and Mastercard Inc embraced cryptocurrencies.
Its stunning gains in recent months have led to concerns from investment banks over sky-high valuations and calls from governments and financial regulators for tighter regulation.
(Reporting by Ritvik Carvalho; additional reporting by Tom Wilson; editing by Dhara Ranasinghe, Karin Strohecker, William Maclean)
Britain sets out blueprint to keep fintech ‘crown’ after Brexit
By Huw Jones
LONDON (Reuters) – Brexit, COVID-19 and overseas competition are challenging fintech’s future, and Britain should act to stay competitive for the sector, a government-backed review said on Friday.
Britain’s departure from the European Union has cut the sector’s access to the world’s biggest single market, making the UK less attractive for fintechs wanting to expand cross-border.
The review headed by Ron Kalifa, former CEO of payments fintech Worldpay, sets out a “strategy and delivery model” that includes a new billion pound start-up fund and fast-tracking work visas for hiring the best talent globally.
“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.
Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.
“This review will make an important contribution to our plan to retain the UK’s fintech crown,” finance minister Rishi Sunak said, adding the government will respond in due course.
The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance all mean the sector’s future in Britain is not assured.
Britain increasingly needs to represent itself as a strong fintech scale-up destination as well as one for start-ups, it added.
The review recommends more flexible listing rules for fintechs to catch up with New York.
“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.
The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).
“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.
Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.
“It’s a question of knowing who to call when there’s a problem,” Swinburne said.
($1 = 0.7064 pounds)
(Reporting by Huw Jones; editing by Hugh Lawson and Jason Neely)
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